Before Segwit2x, Bitcoin is still 2 weeks old, but the cryptocurrency already captures new historical highs. A week ago, Bitcoin barely overcame the bar of $ 6,000. The United States and today for him asking for more than 7,500 dollars. Cryptocurrency volatility is sometimes 300-500 dollars. US per day, that is about 7-10%. And this growth is taking place against the backdrop of ICO bans in China and South Korea. It seems that the mood of investors is more than optimistic and so much the worse for cryptocurrencies. Is there another bubble blowing? Or is there still a future behind the blockchain? And what about cryptocurrency taxation?
Cryptocurrency taxation: are there any risks for Bitcoin
Mining volumes are growing every day, as well as the number of transactions with them. If 10 years ago, mining meant only Bitcoin, now there are more than 1,100 cryptocurrencies. And even if most of them are pyramids or do not mean mining, the remaining coins are enough for the state to become interested in turns.
States have many concerns regarding cryptocurrencies:
- Anonymity plays into the hands of miners and traders, but central banks do not like it very much. The inability to control cash flows puts an end to the early recognition of cryptocurrency as a cash equivalent. The blockchain technology itself will be implemented in various projects, but cryptocurrency will not be the money, which greatly limits their growth prospects;
- Cryptocurrency taxation is the second problem. Until their status is determined, one cannot say that it is a taxable base. And even if you tax miners or traders, there are simply no control mechanisms yet;
- economic independence. Money for Central Banks is an instrument of monetary and fiscal policy. Management of the balance of payments, money supply, pricing allows you to control the situation in the country. Decentralized emissions and uncontrolled turnover are a threat to economic security.
A number of countries in relation to cryptocurrency introduced strict restrictions. Among them are Vietnam, Thailand, China, Russia, etc. True, in China, transactions with cryptocurrency to individuals are allowed, and in Russia, mining is flourishing without problems. Bans in China have led to the fact that 80% of the world turnover in the country turned into 15%. Part of the turnover went to South Korea, which also introduced part of the prohibitions. Cryptocurrency taxation was abolished in Europe (talking about VAT), equating bitcoin to an exchange asset, but this has not brought much success.
If we analyze the Bitcoin chart, we see that investors ignore all these bans. Volatility at the time of the prohibition of 2-4% is nothing compared to the growth of 5-7% against the background of the news about the fork or about the future legalization of cryptocurrency exchanges in Japan. The biggest drawdowns were associated with the closure of stock exchanges in China, problems with BTC-e, etc.
Traders are not afraid of bans for several reasons:
- if the ban is imposed in one country, traders and miners simply transfer their turnovers to another country;
- Cloud mining servers are located in different countries. Taxation of cryptocurrency is problematic – it is not clear which legislation to apply;
- on the contrary, developed countries prefer to keep up with progress, rather than trying to subjugate it to themselves. And because a complete ban does not threaten cryptocurrency.
Conclusion. The fate of the dot-com bubble does not yet threaten cryptocurrencies – too much support from some states. But rampant growth also has its own horizon. The task of the trader is to see the moment of market glut and not to lose money on the correction. Among 1,100 cryptocurrencies, there are a lot of insolvent projects (for example, BitConnect, which is in the TOP-10 by capitalization and is considered a pyramid). And while the growth driver is Bitcoin and its forks, cryptocurrency quotes will grow. But how long will the growth last?